Hong Kong GDP

Hong Kong

Economy decelerates markedly in Q1

In the first quarter, the economy expanded 2.5% over the same quarter last year. The reading came in below the 2.9% expansion tallied in the previous quarter and undershot the 3.0% increase the market had expected. Moreover, the print marked the weakest growth rate since Q3 2012.

The moderation recorded in the first quarter mainly reflected a slowdown in domestic demand. Private consumption added 2.0% in Q1, which was down from the 3.6% rise tallied in the previous quarter. In addition, gross fixed investment growth decelerated to 3.0% (Q4: +5.3% year-on-year). Conversely, government consumption accelerated from a 2.0% increase in the fourth quarter to a 2.4% rise in the first quarter.

On the external front, exports of goods and services grew 1.0% in Q1, which was well below the 5.5% increase tallied in Q4. Imports rose 1.1% in Q1, which was also down from the 6.0% rise registered in the previous quarter. As a result, the external sector's net contribution to overall economic growth improved from minus 1.1 percentage points in Q4 to minus 0.1 percentage points in Q1.

A quarter-on-quarter comparison confirms the deceleration suggested by the annual data; the economy grew a seasonally-adjusted 0.2% in Q1, which was below the 1.1% increase seen in Q4.

The government expects GDP to increase between 3.0% and 4.0% this year. FocusEconomics Consensus Forecast panelists see the economy growing 3.4% in 2014, which is unchanged from last month's forecast. For 2015, the panel expects the economy to grow 3.5%.

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Hong Kong GDP Chart

Hong Kong GDP Q1 2014

Note: Year-on-year changes of GDP in %.
Source: Census and Statistics Department Hong Kong and FocusEconomics Consensus Forecast.

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